WEN Stock Plunges 15% — Trian Reportedly Drops Take-Private Bid Plans, Citing Wendy’s Performance And Valuation

• Nelson Peltz and Trian Partners reportedly hold more than 24% of Wendy’s, making them the company’s largest shareholder.
• Wendy’s CEO Bob Wright has launched a five-point turnaround plan after acknowledging that the company sacrificed quality to cut costs.
• Stocktwits sentiment remained ‘extremely bullish,’ but retail traders were split between expecting more downside and viewing the selloff as a buying opportunity.

Shares of Wendy’s Co (WEN) fell 15% in after-hours trading on Wednesday after a report said Nelson Peltz’s Trian Fund Management has no plans to make a take-private bid for the fast-food chain. Trian, a longtime Wendy’s shareholder, has concerns about Wendy’s performance, including its recent trading price, valuation multiples and current strategic direction, according to Reuters, citing sources familiar with the matter.

Nelson Peltz Holds 16% Stake In WEN

According to a Barron’s report from early August, Nelson Peltz and Trian Partners hold a combined stake of more than 24% in Wendy’s, making them the company’s largest shareholder. Peltz personally owns around 16%, while Trian holds a 7.9% stake.

By pulling back on a possible takeover offer, the investment firm could be giving new Wendy’s Chief Executive Bob Wright time to execute a turnaround plan to address declining sales that cost the company the No. 2 spot among big burger chains, according to the Reuters report. Burger King reclaimed the position after revamping its Whopper sandwich and upgrading its restaurants.

Earlier in August, Wendy’s reported a drop in quarterly global sales, lower net income, higher costs and a decline in earnings per share. Wright had reportedly said at the time the company was “clearly not performing at (its) potential.”

Wendy’s CEO Outlines Turnaround Plan

On Monday, new CEO Bob Wright acknowledged that Wendy’s had compromised on quality to cut costs, telling The Wall Street Journal that the strategy had hurt the chain. He also unveiled a five-point plan aimed at improving the company’s prospects.

Earlier this month, Trian was reportedly exploring a potential takeover of Wendy’s alongside a group of investors that included Bugatti-backed BlueFive Capital and Wendy’s franchisee Flynn Group.

WEN Stock: Stocktwits Retail Sentiment

On Stocktwits, retail sentiment for WEN was ‘extremely bullish,’ unchanged over the past 24 hours, while message volume was ‘high’ at the time of writing. Over the past 30 days, message volume around the stock has surged 359%.

Retail traders on Stocktwits are split, with some worried about further downside without a buyout, while others see the sell-off as a buying opportunity.

One retail trader expressed concern about the uncertainty surrounding Trian, saying, “Trian is backing out, and the shorts are in heaven.” The trader questioned how much further the stock could fall if Peltz backs out and said the company needs to “come out and clear the air.”

Another retail investor focused on whether Trian would be required to disclose its intentions, asking if Peltz is supposed to “file that 13D one way or the other” before an announcement.

A third trader took the sharp decline as a buying opportunity, calling the drop “a gift” and said, “Better load up.”

WEN stock has gained around 8.5% year-to-date. 

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